What is the “means test” for chapter 7 and why is it important?
As a result of the 2005 amendments to the Bankruptcy Code a “means test” was introduced for eligibility for chapter 7. An individual who is unable to pass the means test will have his or her chapter 7 case dismissed (subject to certain exceptions), or must convert his or her case to a case under chapter 11 or chapter 13. An individual chapter 7 debtor with primarily consumer debts will be subject to the means test if his or her “current monthly income” (based on average monthly income for 6 months prior to bankruptcy) is above the median income for a family of the same size. In New York this means the debtor’s income on an annual basis cannot be greater than $42,896 for an individual ($51,994 for a family of 2, $62,815 for a family of 3 and $74,501 for a family of 4). In New Jersey the debtor’s income on an annual basis cannot be greater than $53,557 for an individual ($63,357 for a family of 2, $80,239 for a family of 3 and $93,176 for a family of 4). Current monthly income includes r
Related Questions
- If my income is above the median income for my state for a family of my size does that mean I fail the "means test" and cannot file chapter 7 bankruptcy?
- Does the "means test" of BAPCPA make it difficult for the average person to file Chapter 7?
- Who Will Qualify for Chapter 7 Bankruptcy Under the New Law?
